Final answer:
The initial step in Activity-Based Costing is identifying the company's primary activities, which sets the groundwork for more accurate cost tracing and allocation. The correct option is B.
Step-by-step explanation:
The first step in computing and using Activity-Based Costing (ABC) is identifying the company's primary activities. This step is crucial because it allows for the establishment of a cost hierarchy and laying the foundation to trace direct costs and allocate indirect costs more accurately.
It involves analyzing all the tasks, operations, or processes that are essential to producing a company's products or services. After identifying the activities, the company can proceed to selecting appropriate allocation bases and calculating activity cost allocation rates, leading to a more precise product or service costing.